2min read
Published on: May 30, 2024
#Crypto 360
#Daily Brew
The proposal received 77% positive out of the total votes.
Participants in the Solana (SOL) ecosystem recently voted on a proposal to give 100% priority fees in SOL tokens to the network validators. The vote took place amidst reports of validators entering side deals for additional income. The proposal received 77% positive out of the total votes.
Priority fees refer to additional fees that users pay to validators so that their transactions are processed faster on the blockchain. In the present model, 50% of priority fees get burnt and 50% of it is rewarded. Since this model doesn't incentivize validators’ participation, they are forced to enter side deals.
The team proposed in the Solana Improvement Document number 96 (SIMD-0096) that the priority fee structure be modified to reward validators with 100% of the priority fees. The new model would incentivize validators to prioritize network security and efficiency and possibly deter them from taking part in potentially detrimental side deals in which they prioritize off-chain transactions over Solana’s on-chain transactions.
Several Solana holders criticized the move and claimed that though the new model would lead to a growth in validators’ fees, it wouldn’t be able to eliminate the menace of side deals. Though Solana’s fees are low, it records a high volume of transactions on the network, creating a lot of earning opportunities for the validators.
One of the ways the validators earn on Solana is through maximal extractible value (MEV), a form of tip paid by searchers to be included in Solana blocks. MEV refers to the largest amount of value that validators can create by packing transactions into blockchain blocks. Solana validators earned under $7 million from MEV during the first week of May only, surpassing the MEV earned by Ethereum validators.
SOL price appreciated for over 20% during the last 30 days, presently trading at $164.13.
Source: SOL/USDT, BitDelta
A validator is a participant in a blockchain network who verifies and confirms transactions and then adds them to the blockchain. The role of validators is crucial to a network’s security, accuracy, and reliability. In return, validators are paid rewards in participation fees. Solana network has a total of 1,728 computers acting as validators.
The vote occurred amidst reports of validators entering side deals for additional income.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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